Friday, September 26, 2008

Anand Menon has an excellent essay in European Voice dismissing the "preposterous argument" that the Lisbon Treaty would have helped Europe deal with the credit crunch or the Georgia crisis. This is his conclusion:

"...the brutal truth exposed by both crises is that the EU's soft power relies for its effectiveness on a permissive hard-power environment, on real rather than confected common purpose. The EU can bring about change, but only if no powerful state opposes it. The Europeans, quite simply, lack the power to deter, let alone coerce Russia. Claims that Europe is one institutional reform away from global power feed into a profound sense of denial afflicting many in the ‘Old Continent'. How long is it, really, since the states of Europe, either individually or collectively, could decisively shape global politics?

The open contempt Moscow has shown for European attempts to secure its withdrawal from Georgia underscores a stark, painful truth.

Now more than ever, Europeans inhabit a non-European world. There is no choice but to adjust to that and safeguard, as quickly and soberly as we can, what is left of Europe's role in global politics and economics."

Menon touches on a key failing in the thinking of much of the European political class - the idea that Europe's rapidly declining power can be remedied by closer institutional centralisation.

Surely this notion has been tested to destruction by now?

In the broad sweep of history, Europe's period of dominance was short - 200 years at most. This ascendance was achieved as a result of complex factors that are hotly debated amongst historians. But there are two key points to note. First, Europe may be weak now, but it was relatively much weaker in the past (as recently as 1700, Qing China and Mughal India each represented a little less than 25 per cent of world GDP). Second, Europe's meteoric rise was achieved not through the centralisation of power, but through technical, fiscal, political and cultural innovation amongst diverse nation states.

Is European decline innevitable? Can it be reversed? If so, how? This subject won't be resolved in a blog post - but recent events should certainly provoke some serious thought on the issue.

Wednesday, September 24, 2008

Every crisis is an opportunity for the those who believe in the project of "ever closer union".

So it's no surprise to see in the FT today - that the inevitable is finally starting to happen in euroland:

The crucial problem on this side of the Atlantic is that the largest European banks have become not only too big to fail, but also too big to be saved. For example, the total liabilities of Deutsche Bank (leverage ratio over 50!) amount to about €2,000bn (more than Fannie Mae) or more than 80 per cent of the gross domestic product of Germany. This is simply too much for the Bundesbank or even the German state, given that the German budget is bound by the rules of the European Union’s stability pact and the German government cannot order (unlike the US Treasury) its central bank to issue more currency. Similarly, the total liabilities of Barclays of around £1,300bn (leverage ratio 60!) are roughly equivalent to the GDP of the UK. Fortis bank has a leverage ratio of “only” 33, but its liabilities are three times the GDP of its home country of Belgium.

With banks that have outgrown their home turf, national treasuries and regulators in Europe are living on borrowed time: they cannot simply develop “road maps” (the only result of various Ecofin discussions of regulatory reform by finance ministers), but must contemplate a worst-case scenario.

Given that solutions for the largest institutions can no longer be found at the national level it is apparent that the European Central Bank will need to be put in charge as it is the only institution that can issue unlimited amounts of a global reserve currency. The authorities in the UK and Switzerland – which cannot rely on the ECB – can only pray that no accident happens to the giants they have in their own garden.

So the ECB finally gets put in charge of financial regulation/supervision. Quelle surprise.

The only weak step in the argument is the last one - about being able to print money in a "reserve currency" - what exactly are they sayingthe threshold is here?

(a) Both GPB and CHF are reserve currencies in proportion to the size of their economies - and (b) why does that even matter?

The point is to have the option not excercise it. Yes, the UK is a more open economy than the eurozone taken in aggregate. But mass "printing of money" whatever that means would still cause inflation in the Eurozone. Arguably the UK and Swiss have greater flexibility here because they have freedom of action - it is not clear under which circumstances the ECB could start "printing money" - i.e. changing its rules and targets.

The UK and the Swiss authorities at least have the option of coordinating their fiscal and monetary policies, whereas the members of the eurozone will shortly being having some "interesting" discussions as the interests and policies of different member states diverge more and more, the rules are broken further, and the ECB tries to square the circle. Good luck with that.

Some more developments on Ethan Winner, the PR hit-man hired by the Commission to set up a "crisis communications" unit to promote the EU. His firm specialises in helping large organisations get round 'problems' - click here for more on his past record.

There been much debate on the US blogosphere in recent days on Winner's activities in the US Presidential election. See here, here, here and here.

Responding to original accusations made on the Jawa Report, Winner has admitted to distributing a video designed to smear Republican Vice Presidential nominee Sarah Palin (the video was behind the row over Palin's alleged support for Alaskan independence).

According to Jawa, Winner's company has a past record of producing fake 'grassroot style' messages designed to look like they did not originate from an organized campaign, a practice know as “astroturfing”.

Will we see similar tactics being adopted by the pro-Treaty camp in the second Irish referendum on Lisbon? The stakes are high and they will not be pulling their punches...

There is still uncertainty (and some scepticism) over whether the Democrats were complicit in Winner's video. But whoever initiated the action, we can be certain that it was not funded by American taxpayers.

The same cannot be said for Winner's new campaign to promote the EU - you will be footing the bill whether you like it or not.

The French EU Presidency is jumping on sport as a way to promote the EU.

Paris is organising a major public event for 5 October, during which the Champ de Mars will be transformed into a "European sports village."

According to PA:

The idea behind bringing together Europe's best athletes for a major public event is to celebrate Europe as a great sporting nation, and highlight the desire to place sport, in all its forms, at the heart of the European project.

Sport serves as a powerful vehicle for helping to promote a general sense of European belonging, particularly among young people.... As a vehicle for social, educational, cultural and environmental development, sport is undoubtedly called on to play a key role in forming a European identity and its shared values.

Monday, September 22, 2008

MEPs are to investigate claims that Libertas, the Irish group that campaigned successfully against the Lisbon Treaty, is some sort of CIA-backed front.

Nostalgic student revolutionary Prominent MEP Daniel Cohn-Bendit said in a statement that if these allegations are proved correct, "this would clearly show that there are forces in the United States willing to pay people to destabilise a strong and autonomous Europe. If this can happen for the treaty vote, it raises grave concerns for interference in next year’s European elections."

Apart from wondering why shadowy forces in Washington would have much interest in 'interfering' in the European Parliament elections in the first place, it struck us that cranky conspiracy theorizing is becoming a distinct trend amongst the pro-Lisbon crowd. We were reminded of claims back in June from French Europe Minister Jean-Pierre Jouyet that the Irish no vote was masterminded by sinister American neocons:

"Europe has powerful enemies on the other side of the Atlantic, gifted with considerable financial means. The role of American neo-conservatives was very important in the victory of the No."

Ever wondered who you would turn to if your company made the rattly bit on the Challenger space shuttle before it blew up? Or was the owner of the Three Mile Island nuclear plant (the one that suffered a meltdown in 1986)? Or perhaps if a group of pesky NGOs stopped your consortium of oil giants building a pipeline in Africa?

Answer: The same guys who are now doing "crisis communications" for the EU...

The operation is being headed up by one Ethan Winner (a great name, incidently). According to his profile:

"Presently, Mr. Winner is heading an international team in creating a Europe-wide crisis and communications campaign to promote the European Union."

Winner & Associates seem to have enjoyed past success in extricating their clients from a variety of tight spots. Will they be able to do the same for the EU following the Irish rejection of the Lisbon Treaty?

If, as seems likely, the Irish are invited to vote again, it is probable that Winner's crisis communications campaign will be on the front-line of the EU's 'public information' offensive.

On their countdown to 'Brown's big apology' , expected tomorrow, the Conservatives have finally arrived at the PM's failure to hold the promised referendum on the EU Constitution Lisbon Treaty, as the last of their list of things he has to apologise for.

A good excuse to remind people that:

When Gordon Brown became Prime Minister he said: ‘the manifesto is what we put to the public. We’ve got to honour that manifesto. That is an issue of trust for me with the electorate’. Labour’s 2005 election manifesto promised a referendum on the EU Constitution. But Gordon Brown forced through the Lisbon Treaty – the renamed EU Constitution – on a three line whip without any democratic mandate from the voters to sign it.Commenting on the relationship between the Lisbon Treaty and the EU Constitution the Spanish foreign minister, Miguel Angel Moratinos, said: ‘I believe that 98 per cent of the content … of the Constitutional Treaty, is to be found in the future EU Treaty. The wrapping has been changed, but not the content’ (El Pais, 23 July 2007). German Chancellor Angela Merkel said: ‘the substance of the Constitution is preserved. That is a fact’ (Daily Telegraph, 29 June 2007).

Friday, September 19, 2008

Detached MEP Richard Corbett has found “unusual entertainment values” in a Lords report on the future of the EU’s regional policy (also known as the structural funds), for which we provided written and oral evidence. Richard is very excited about the peers’ examination of our evidence on the high admin cost of the policy and about the Committee’s conclusion that the funds are "effective and, in general, fit for purpose".

We sort of suspected that the Lords Committee wouldn't agree with us, given its fondness of everything coming from Brussels. A figure like Lord Kerr – one of the patriarchs behind the EU Constitution/Lisbon treaty – is not exactly our greatest fan.

But it’s still slightly surprising, since highlighting the heavy administrative burden of the EU’s structural funds is not particularly controversial. On the contrary, the Committee’s conclusion that the admin cost is “overstated” will surprise many. Such as Richard Corbett’s Labour Party colleague Alan Johnson who had this to say when he was in charge of the brief:

“Devolving the delivery of regional policy in support of common objectives to Member States would entail less red tape and bureaucracy…We believe that actually we could introduce huge cuts in bureaucracy and rid ourselves of the frustration of dealing with that process by having a properly structured, debated and set out method, whereby, richer European Union countries did not go through that wasted process.”

A number of mainstream reports in the UK and elsewhere echo this very point. See here, here, here, here, here, for instance. The bureaucratic burden is no doubt part of the reason why other member states, such as Sweden, the Netherlands and Denmark, want to bring back regional policy in the EU-15 to where it belongs – close to the people who are actually affected by it (subsidiarity, remember?).

That is also the reason we challenged the Lords Committee to come up with its own figure. Such a figure, we might add, should include the cost for the public sector - the EU institutions, the seven (!) Whitehall departments involved in the funds, the RDAs, the local Government Offices, etc. But also the admin and compliance cost for the recipients of the funds, similar to what has been done for the cost of the CAP to British farmers.

Given the widely documented concerns over these costs, it is puzzling that the Lords Committee brushes them aside without offering any aggregated data to support their own claim – particularly in terms of the cost to the recipients. It might serve as entertainment for Richard (which is actually rather sad come to think of it), but it does little to inform us about the most efficient way to spend regeneration cash.

Richard is also up in arms over us supposedly citing “a mere press report” to back up our numbers. He seems to be referring to a PA story which Lord Kerr didn't quite approve of, about the cost of an EU programme in Northern Ireland. Apparently, Lord Kerr had never heard of the Press Association before. In any case, on page 13 in our original report, the source in question – who happens to be Northern Ireland’s Brussels representative – is clearly and properly cited.

So enough of this nonsense. The OECD, the European Court of Auditors, the influential Sapir report for the Commission, the British Government and plenty of academicliterature have highlighted serious flaws with the structural funds - including lack of “convergence” between poorer and richer regions, problems with both the measure for allocating the funds and the disbursement rules, excessive red tape, sloppy spending, mismanagement and a most troubling lack of transparency in the entire system.

Richard Corbett is obviously too busy writing misdirected blog entries and finding ways to amuse himself. But for the rest of us, these flaws matter. Revolutionary as it may sound, we care about the way our tax money is being spent. And we would like to see poorer regions catch up with richer ones – but in the real world, not only in the heads of certain MEPs and Commission officials.

Wednesday, September 17, 2008

Former Europe Minister Denis MacShane has reacted to Stuart Wheeler’s call today for a referendum on the Lisbon Treaty.

MacShane said a referendum would be:"a feast for all the xenophobic and isolationist forces in British politics and be a major boost for the BNP, UKIP and those 'better off out' Tories who want Britain to quit Europe".

"David Cameron… would plunge Britain into the maelstrom of a feast of anti-Europeanism by campaigning to repudiate the decision of the Commons and Lords this year to ratify the Lisbon Treaty.”

"The BNP, UKIP and all other anti-European forces would join in to indulge in months of xenophobic and isolationist hysteria.”Reading this in the office, it struck us that MacShane's increasingly fiery rhetoric could be a product of 'curry addict synodrome'.

As regular vindaloo-eaters will be aware, the hotter the curry, the less able you are to taste normal foods afterwards - meaning everything needs to be overspiced for you to taste anything at all. Perhaps MacShane just doesn't see anything out of the ordinary in using this sort of language - it's just his default mode of communication...

The Economist blog picks up on the news that Norway will donate $1 billion between now and 2015 to a new Amazon protection fund set up by Brazil (presumably funded with oil revenues..?).

Irony aside, it is widely remarked upon that forest preservation was one of the most important gaps in the Kyoto Protocol, and current climate change policy more generally. Deforestation accounts for about 25% of global carbon emissions (around the same as the entire emissions of the US), and avoiding it, together with reforestation, are widely acknowledged to be amongst of the cheapest ways of cutting carbon. It is certainly a far more efficient use of economic resources than ludicrously expensive biofuel targets.

The question is how to make it work. The ‘son of Kyoto’ badly needs to come up with a solution to forestry – are these funds a good model to go by? They are probably better than using avoided deforestation to generate tradable permits that can be ‘exported’ for use in developed country cap and trade schemes – as has been suggested. A flood of very cheap permits from tropical countries would kill the incentive to reduce emissions in the industrialised world, a problem already seen with the UN Clean Development Mechanism, a scheme which allows polluters in rich countries to buy in carbon offsets from projects overseas that (in theory) cut emissions.

But ‘sustainability funds’ like this one from Brazil do need to be carefully managed and enforced to make sure these large sums of money are ending up in the right hands, and do actually mean less deforestation. It looks like the Norwegians will try to make their funding contingent on the latter condition being met. But it is a tricky business, especially when the authorities in the country concerned may be unable to control (and possibly be complicit in) illegal logging.

Tuesday, September 16, 2008

The word from Bournemouth is that the Lib Dems are going all out to soften Vince Cable’s apparent U-turn on the euro.

Ed Davey has been trying to patch things up with a rallying speech proclaiming: "We are and always will be the party of Europe."

He said: “We have the confidence to stand unambiguously for Europe”, while Charles Kennedy accused the Government of being "insufficiently engaged,” and said the Tories preached disengagement.

But hang on a minute, isn’t this the party that less than 4 months ago forced its MPs to abstain on the Commons vote on the promised referendum on the EU Constitution Lisbon Treaty?

Isn’t this the party that sacked three frontbenchers for honouring their commitments by refusing to abstain and voting in favour of a referendum?

Isn’t this the party that changed its position on the referendum three times, before eventually arriving at a botch-up?

How much more disengaged can you get? How much further away from “standing unambiguously for Europe"?

The Lib Dems are currently forecast to lose two thirds of their 53 English seats in the upcoming election to the Tories. Chris Huhne, in particular, will be doing his best to make his Eastleigh constituents forget the fact that after they voted by more than 90% for a national referendum on the Lisbon Treaty, he went and voted against one in Parliament.

Monday, September 15, 2008

The UK Government seems a bit stressed about the forthcoming directive on maternity leave.

There is a story about it on EUobserver, but it doesn't mention what is one of the most important aspects for the UK.

As it stands at the moment, the proposal would give the mother free choice as to when she takes the non-compulsory part of maternity leave. Bizarrely there doesn't seem to be any limit as to how soon before or after the birth the leave can be taken and any requirement for the leave to be taken consecutively.

The full leave entitlement in the UK is a currently a (pretty generous) 52 weeks, and the 2 weeks after giving birth are compulsory. The directive would raise the latter to 6 weeks and would effectively allow the mother to take any of her non-compulsory entitlement (i.e. the other 46 weeks) any time she wanted - and in as many periods as she wanted – thus allowing for scenarios which would create total chaos and make it virtually impossible for cover to be arranged.

The UK are trying to get it fixed so that peoople have to take their time off in a reasonably predictable way, and make it easier to manage cover for firms. But it soesn't seem to be in the bag yet. Stay tuned.

Gunther Verheugen had some interesting things to say in his press conference at the European Institute of Public Administration

He said the Parliament was part of the problem:

“Better regulation at EU level, in my view, is first of all of all a question of political awareness and political culture…you know that I was running into a lot of difficulties here but contrary to the conventional wisdom the strongest were not in the Commission. The strongest problems were in the European Parliament”

“There is a very strong view in the European Parliament that better regulation is something that is directed against the priorities or the prerogatives of the Parliament. It’s very difficult to convince all of the parliamentary groups, some of them fully understand but it’s very difficult to get the full support here because if you have a rule you want to change there is certainly always one person who is a hundred percent convinced that this is a rule that we exactly need.”

He also flagged up how much EU legislation is driven by lobbying:

“You also realise that very often, and this is something that really shocked me – this is the first time I say that in public and in my memoirs I will say a little bit more about it – what really shocked me was that during the process I have found in how many cases European legislation is triggered by interest groups. It’s simply the result of pressure from one interest group that is presented as something that is important for the public but it is not. In reality it is in the interest of one particular group or even one particular company”.

And he had a novel proposal:

“I think we should also do more to create transparency at the beginning of the process... I would like to know if there is new proposal on the table coming from my colleagues who has asked for that. Start your document with a paragraph saying who has asked for that piece of legislation.”

He also hit the nail firmly on the head, and identified what you might say is the whole problem with the EU:“There is a way of thinking in the institutions that Europe, the more regulation, the more rules you have, the more Europe you have,” said Verheugen. “I call that the Jacques Delors heritage... keep the machine running... oil the machinery... give the legislators work to do... keep the process running... They’re seeing European integration as a process, and the process is, making rules.”

“It’s very difficult to explain to officials who have the understanding that what they are doing is indeed an important contribution for European integration... to explain them that sometimes, less is more.”

“It’s a mistake to believe that you have more Europe if we have more regulation,”

Sunday, September 14, 2008

"We believe that when the time is right Britain should enter the euro,that decision should be taken on the back of a recommendation by ussubject to a referendum of the British people.

"Is it a debate for now? No. I think it's off the radar screen."

The party leader also said that groups of countries around the worldwere looking to consolidate currencies as a system of "safety innumbers" at a time of economic volatility.

Er? Which countries exactly?

And why does a common currency become a better idea in volatile times? Tell that to the ECB, as they try to do the monetary splits to please both Germany and the countries of the periphery. Good luck with that.

The Observer reports that the Lib Dems are planning to drop or downplay their historic commitment to joining the euro. Vince Cable seems to be the main man behind bthe move.

He says calling for entry is like trying to swim after a ship which has left the harbour, and points out to boot that the one size fits all interest rate has caused horrendous property bubbles in places like Spain.

But not everyone is happy. It adds up to a plan to come fifth in the euro elections, says Chris Davies MEP.

Friday, September 12, 2008

The European Parliament has voted for a report, drawn up by Lena Ek, which suggests that shipping should be included in the EU ETS. The UK has tended to favour action by the IMO instead.

To include aviation in the ETS it was agreed that the EU would tax all flights from or to the EU.

But in aviation the economics rule out diverting to a point near the EU border and then doing a shorter "hop" into the EU to artifically lower the ETS cost. It costs too much and takes too long to land and take off again.

How do you decide what counts as EU shipping? It can't be by registration (because even more would then register in Liberia).

So it would have to be some kind of charge per visit based on the size of the engine of the ship and how far it had travelled.

But in shipping, things being slower, there would probably be an incentive to divert to countries near the EU. Why pay tax for a whole journey from China to the EU, if you can pull up alongside in Morocco or Norway, and then only pay the tax from there the EU?

It's a tricky one - be interesting to see what they come up with. The green groups seem to favour a straight tax of some kind. One group is calling for "differentiated port charges, en-route charges and fuel taxes"

Wednesday, September 10, 2008

The Irish Government's big poll is finally out, and they say that the only reason people voted no is because they are a bunch of ungrateful, pig ignorant, boxty-munching... poorly informed about EU affairs.

It will be interesting to see what questions they used to get the results they wanted. It looks like the stitch-up for a second referendum is firmly on.

As the economist points out today, although the biggest spontaneous answer from No voters about their choice is a lack of understanding, the biggest reasons from yes voters also indicate a lack of real understanding about the treaty – they are vague and reflect a general positive view of the EU rather than any particular attachment to the treaty itself.

Among the top (spontaneous) reasons for voting yes were:

I followed advice 22%

EU has been/is good for Ireland (unspecified) 20%

Treaty is good for Ireland (unspecified) 16%

Felt it was the right thing to do 14%

Feel European/am a supporter of European integration 8%

Etc etc

The difference, perhaps, is that Brussels feels that these rather general reasons for voting yes are "legitimate", but general reasons for voting no are not.

The NHS European Office has recently been established to represent the NHS organisations in England to EU decision-makers. The NHS is one of the largest publicly funded healthcare systems in the world providing the majority of healthcare in England. The NHS is also the largest employer in Europe with 1.3 million employees.

We would like to invite you to our launch reception, where you will be joined by high-level representatives of the NHS, senior delegates from the EU institutions and key stakeholders.

The event will be addressed by:

- Linda McAvan, Member of European Parliament - Bryan Stoten, Chairman of the NHS Confederation- Robert Madelin, Director General of DG Health and Consumer Protection of the European Commission

Former German President Roman Herzog had an article in the FAZ earlier this week. Having nearly finished a translation of our own, it seems EUobserver has now put one up.

The hook for the article is the forthcoming verdict of the German Federal Constitutional Court at Karlsruhe, in which it will decide whether or not to accept that EU law is superior to German law. The cause is a complaint relating to the Mangold Judgement, in which the ECJ (Herzog argues) broke several principles of EU law.

In the article he also lists a series of other rulings by the ECJ, in which, he argues:

"the ECJ consciously and systematically ignores the central principles of western judicial legal interpretation: decisions are carelessly justified; the will of the legislator is turn into its opposite and legal maxims are invented, which it can then later use as the basis for its decisions."

Here is what he has to say about the case itself:

In 2000, the European Union (EU) passed a non-discrimination directive which prohibited the unequal treatment of people in "employment and occupation" on account of age. Of course this EU directive also contains an explicit provision that member states may discriminate against people due to age if such practice serves to foster employment. The manner in which this provision is realised is largely left to the member states.

However, two lawyers in Munich held the view that this reduction of the age limit constituted an infringement of the said EU directive, and so they brought the case to court in 2003. The ECJ judged as follows: The German labour market reform was in fact deemed incompatible with the EU's non-discrimination directive, since it could not be "proved" that the German reform provisions were "objectively required" for the stimulation of the employment of older employees. This so-called "Mangold Judgement" is disputable for various reasons.

Firstly, both labour market policy and social policy are still core competences of the member states. However, this case clearly demonstrates to what extent EU regulation and EU jurisdiction nevertheless interfere in the governing of these core competences.

For even though the EC Treaty allows for a European regulation of non-discrimination, the question of why the EU regulates age discrimination on the labour market at all is raised in all its seriousness. According to the principle of subsidiarity, the EU may take action only if it really has a better solution to a problem than the member states.

According to law as it exists, a basic criterion for such a situation is that the problem must concern an issue of transboundary impact. However, unlike the question of nationality, age discrimination does not have any transboundary relevance and can therefore be easily dealt with by the member states themselves. Yet, the court blithely ignored it.

At least the EU directive does declare unequal treatment on account of age as expressly admissible for the purpose of promoting employment in the member states, but even this did not concern the ECJ. Despite everything, it overthrew the German employment promotion measure.

Secondly, EU directives do not apply to member states directly, but first have to be transposed by the national legislature, which may resolve on the form and methods of the relevant measure independently. Germany had to transpose the aforementioned non-discrimination directive by 2 December 2006. Therefore, there was no obligation to transpose it. Moreover, the lowering of the age limit was due to expire anyway by 31 December 2006, in other words a few days after the expiry of the enforcement deadline. This was also ignored by the ECJ.

Thirdly, to justify its judgement, the ECJ resorted to a somewhat adventurous construction. The ECJ believed it had found a ban on age discrimination within the "constitutional traditions common to the Member States" and "various international treaties". So it was not actually the non-discrimination directive (as yet to be enforced) which caused the German reform provision to breach EU law, but a "general principle of community law".

However, this "general principle of community law" was a fabrication. In only two of the then 25 member states – namely Finland and Portugal – is there any reference to a ban on age discrimination, and in not one international treaty is there any mention at all of there being such a ban, contrary to the terse allegation of the ECJ. Consequently, it is not difficult to see why the ECJ dispensed with any degree of specification or any proof of its allegation. To put it bluntly, with this construction which the ECJ more or less pulled out of a hat, they were acting not as part of the judicial power but as the legislature.

Fourthly, in its judgement the ECJ ordered the German reform provision to remain "not applied" with immediate effect. In fact, it was declared null and void. This also constitutes a highly questionable paradigm shift. The EC Treaty stipulates that member states are not directly bound by EU directives. This means that it is not the EU directives but the national transposition laws that must first create rights and duties for citizens.

The ECJ used to respect this, too: If the national law of a member state was not compatible with an EU directive, the ECJ confined itself to pointing out the inconsistency. Although the member state concerned then had to revise its law, the former version (incompatible with EU law) remained in effect until that was done. Hence, citizens could rely on the binding effect of their national laws. This has now changed: As a consequence of the ECJ judgement, all temporary employment contracts concluded during the German labour market reform were converted into regular employment contracts overnight – resulting in the subsequent material damage incurred by the affected companies.

With these four dubieties, the "Mangold Judgement" provoked almost unanimous and massive criticism among legal experts.

He goes on to argue that there are a series of other cases where the ECJ has ignored, distorted or inverted the intentions of lawmakers.

One relates to a tobacco advertising ban passed by the EU in 2000. Because the EU as yet has not powers in this area it was passed under the internal market article, on the rather ropey reasoning that otherwise national ad bans would become an obstacle to the internal market. The German Government challenged this, pointing out in particular that it was peculiar, in that case, that it applied to local papers too.

Herzog notes: "The fact that local papers are hardly ever sold abroad and therefore an actual impediment does not exist was not considered by the ECJ. The vital German counter-argument that all tobacco ad bans hitherto existing in the member states expressly excluded foreign newspapers and thus could not impede the free sale of foreign newspapers containing tobacco ads was simply "turned upside down".

A second is the infamous ruling on environmental crimes, where the court invented a new right for the Commission to propose criminal laws in fields like the environment where it had competence. Herzog notes the ECJ's extraordinary reasoning: "As a general rule, neither criminal law nor the rules of criminal procedure fall within the Community's competence. However, the last-mentioned finding does not prevent the Community legislature from taking measures which relate to the criminal law of the member states that it considers necessary".

A third relates to a ruling in which the ECJ decided that non-discrimination provisions in a treaty between the EU and Tunisia could be used to challenge for right to remain, despite the fact that the Treaty in question simply rules this out.

He asks

What would happen in Germany if, for instance, the Federal Labour Court imposed such regulations upon the legislator? Yet, at the European level, such incapacitation of the "Masters of the Treaties" appears to go unresisted!

He calls on the court to overrule EU law:

the question the Federal Constitutional Court now has to answer regarding the Mangold Judgement is crucial: if decided in favour of the litigants, the ECJ would be restrained. This would also mean that the ECJ Judgement would not be applied in Germany so that the precedence of EU law over national law would be overturned. But this would be acceptable. Not only because the non-discrimination directive is now in force and thus the non-applicability of the ECJ Judgement would not entail any significant impacts on the legal unity in the EU, but even more because a judgement which dismissed a constitutional complaint would make it much more difficult, probably impossible, for the Federal Constitutional Court to control the ECJ in the future.

And failing that he also has a proposal for a new court to protect the rights of the member states from the EU:

The ECJ is not suitable as a guarantor of subsidiarity and a protector of the member states' interests. This is not surprising, as first of all, according to Articles 1 and 5 of the EU Treaty, the ECJ is obliged to participate in the "process of creating an ever closer union". Secondly, an EU-biased jurisdiction of the ECJ leads to the situation that the areas where the ECJ may judge are also growing, thereby displacing member states' courts, which means that the ECJ is constantly gaining influence. This general tendency is not modified by the occasional deliberately cautious ECJ judgements passed in order to serve as a sedative to the growing resentment of the member states. Against this background and in light of the achieved integration level in the EU, it is absolutely vital that an ECJ independent court for competence issues be set up.

Tuesday, September 09, 2008

DJ Nozem has Joseph Daul (the Chairman of the EPP in the Parliament) bang to rights:

Today:

French MEP Joseph Daul argued that those in the ‘close Strasbourg’ camp are ducking certain realities: “A Euro-MP wanting to sit solely in Brussels is not being honest. An MEP is obliged to travel. If I want to see the European Central Bank, I go to Frankfurt. I have to go to Luxembourg if I need to see the European Court of Justice. For veterinarian affairs, it’s Dublin. The food safety agency is in Parma… So a European deputy can’t only work and be based in Brussels.”

Flashback to 2006:

"Why have all these agencies in London, Frankfurt or Parma?" he asks. "They too cost a lot of money. Why not relocate them too in Brussels?"

In 1997, when the 'mad cow' crisis arose, he was chair of the National Federation of Beef Producers in France and of the 'beef' group in Europe. The management of the crisis required diplomacy, perspicacity and faith in the future of the sector in order to juggle with the scientific realities, media impact, the despair of producers and the psychosis among consumers.

Psychosis? Guess mad cow was worse than we thought.

We also learn that he is a trade unionist as as well as a farmer - which explains a lot about the centre right in Europe...

Not quite sure who these guys are - http://sosgeorgia.org/ - but it seems to be quite professional and full of interesting stuff.

Seems to be sponsored by a Georgian business called ITGroup.

Under the headline "It’s time the EU stopped ignoring Georgia" they write that:

"Georgia will probably not join the EU for a long time yet, if ever. Unfortunately, the prevailing climate in fortress Europe (especially the French and Germans who were pretty reluctant to allow East-Central Europe in let alone Georgia) is that the Union has expanded enough for the time being. Serbia may be allowed in alongside Bosnia and Croatia in order to pacify the Serbs and stop them electing aggressive nationalists, but for Georgia, things look grim. Georgia has so far failed to get itself recognised even as a potential member."

They have some interesting ideas about what the EU should do:

"The EU needs to seriously consider the long term possibility of Georgian membership and in the short/mid term think about how to strengthen the Georgian state against its expansionist northern neighbour. The most obvious way of doing this is to slowly phase out visas for Georgian citizens altogether. This would not be a costly measure for the EU as Georgia, unlike other potential members like Ukraine or Turkey, is so small that even if half its population moved west, the effect would be negligible. In addition unlike most of the new EU states, Georgia shares no land border with the rest of the EU, so Georgia would not become a hub of illegal immigration. The benefits however would be myriad. Quite aside from the obvious economic dividends for Georgia (more foreign investment, better transport links, Georgian wine in western stores etc.) the political effect will be to guarantee Georgian independence and even help solve its conflicts. At the moment a Georgian passport is pretty useless to the Abkhazians and Ossetians who hold Russian citizenship."

"This would be very different if Georgia benefited from a visa free regime with the EU. We could see queues of Abkhazians and Ossetians in front of the passport offices of Zugdidi and Gori."

"In short, even if “old” Europe does not want to extend full membership to Georgia, a “privileged partnership” of the sort Norway or Switzerland enjoys through the EEA or EFTA would be more than enough to secure Georgia’s future as a peaceful and prosperous member of the European family. However, we should not hold our breath, as the EU summit showed us that for now the old timidity towards Georgia seems to be more entrenched than we would like."

Monday, September 08, 2008

The Centre for the Study of Financial Innovation is a great outfit, which - amongst other things - tries to keeps tabs on Brussels regulation of the City.

Their bulletins make depressing reading. Their post-summer round up talks about the torrent of legislation they will discuss at their next meeting:

What have our representatives been up to? A skim through recent press cuttings reveals:

- new proposals to regulate the rating agencies (July 8);

- ideas for better governance of the IASB (July 8); and

- the formal go-ahead for Target-2 S, unwanted and un-needed though it may be (July 17).

Looking ahead, we have Solvency II, UCITS, SEPA, revision of the Collateral and Settlement Finality Directives, revisions to the CRD, new proposals on transparency, valuation of complex products and risk management etc etc. And (according to Graham Bishop), the shake-up in the Parliament, particularly on ECON, is likely to be bigger than we had expected. In other words, business as usual.

All that's just in one area of the economy, over a couple of months. It represents a huge stream of costly - and quite possibly unhelpful - legislation.

We took stock of new EU financial regulations a while back and there are some serious problems - not least a price tag of up to £23.5 billion for the most recent tranche of legislation.

But instead of correcting its mistakes, the regulatory "machine" just spits out more and more laws.One of the most important ideas in politics - the idea of laissez-faire - seems to be completely alien to Brussels.

Unless it can discover it, the Union is doomed to death by a thousand regulations.

Wenig discussed the possibility of payment or taking a lucrative job with the businessman. He said he would decide further once he had provided “results”.

He leaked the names of two Chinese companies likely to get special status if the EU imposes a protective tariff barrier against Chinese candle-makers. The information is potentially worth millions to those trading with these companies.

At the Commission's midday press briefing today they said that OLAF have opened up a file on the case. That *could* be the precursor to opening up an official investigation.

Don't hold your breath waiting for heads to roll though.

Firstly, the Commission are behaving rather defensively. Having been approached about the case they put round a press release late on Friday to try and undermine the Sunday Times exclusive. This is exactly the kind of behaviour which makes journalists wary about contacting politicians and officials to give them right of reply. It's really bad practice.

Secondly, OLAF is not exactly known for its ruthless pursuit of bent officials.

The head of the troubled agency has been hauled up by MEPs for obstructing investigations, and attacked by the EU Ombudsman for his handling of the Tillack case. Member states asked for him to be sacked, but the Commission refused, despite leaked OLAF documents which showed that that the agency conducts “fake investigations”.

Our prediction? They will kick this into the long grass, and the official will keep his job.

Then again, perhaps we will be proved wrong...

PS - the EU's ludicrous tariffs on Chinese candle-makers may remind the economic historians among you of a certain parable.

At the Global Vision/Telegraph conference this morning Valery Giscard d’Estaing outlined his idea for the UK to have “special status” in the EU so that the others can be free to move towards a “united Europe” without British obstruction.

But he also reminded us once again about how British voters had been duped out of the referendum the Government promised on the Lisbon Treaty – repeating that it “is purely a legal re-writing – incidentally unreadable – of the draft Constitutional Treaty.”

“It is the same text apart from some minor changes", he said, reminding us that following the French and Dutch ‘no’ votes, it had been deliberately left to the “Council legal experts” to “coat the text in legalese,” because “we said to ourselves we cannot present the same text” to the electorate. He went on: “It’s true that it [the EU] is not very democratic… The Parliament and the Commission are always trying to intervene on domains where they do not have any power.”

He even reckons the EU can learn some lessons from China: “We should have a yearly big debate between the European institutions, the national parliaments and all the actors involved, as in China.”

Hmmm. Not sure we should encourage the Commission to learn from the Chinese Communist Party...

"Differences of opinion can be handled from the basis of a permanently antagonistic standpoint, some wanting to advance integration ... others trying to slow it down by complicating negotiations, by flattering nationalisms or by deploying very smart manoeuvrings towards a new enlargement.

He suggested those are "the sort of things that British diplomacy is awfully good at" but warned that this current approach is exhausting for all concerned and it is disappointing... because public opinion is only presented with negative outcomes."

"Giscard seems to envisage a set of opt-outs from future treaties rather than a derogation from past ones. His countryman Pascal Lamy has proposed something more along the lines of what Switzerland has: free trade and formalised intergovernmental collaboration, but little else. Regular readers will know that this blog inclines toward the latter view: Britain should be an independent country, trading freely with Europe and the wider world, and participating in common European endeavours on an issue-by-issue basis and only with the consent of Parliament."

Friday, September 05, 2008

Interesting - the government's Migration Advisory Committee are running a consultation on whether the UK should renew or abolish its labour market controls on people from Romania and Bulgaria.

They note that: "The Government is obliged by EU law to notify the European Commission if it intends to maintain labour market restrictions on nationals of Romania and Bulgaria beyond January 2009."

The list of questions they sent us in the post are below.

If it weren't for rising unemployment, and the fact that Brown was traditionally more in favour of the controls than Blair, we would have thought it was a cert that the restrictions would have been lifted - but now? Hard to say.

What do you think?

Questions for MAC work on Bulgaria and Romania

Policy and economic context1. What would be sensible policy objectives in terms of deciding whether or not to lift the restrictions (eg. maximise GDP per head, fill skill gaps etc)?

2. What was the economic rationale for current restrictions placed on Bulgaria and Romania (A2)? Have the economic and other circumstances that provided a basis for the current A2 restrictions changed, and how?

3. What restrictions are in place in other EU countries (A2 and A8) and how and when may that change in the future?

4. How have restrictions in other countries affected the magnitude and characteristics of A2 (and A8) migration flows into the UK?

5. What happened to flows of in and out migration in countries that opened up their borders to A8 migrants and those who did not? How did the policies on A8 interact across countries?

Labour market context

6. What type labour (skill, experience, qualifications and education levels) is available in the A2 countries? Which workers will want to come to the UK?

7. What is the economic situation in A2 countries and how might this affect the potential supply of A2 labour? What can we learn from our experience of the A8?

8. Is there evidence of labour shortage (low skilled or other) or a mismatch between supply and demand in the UK that A2 workers may help to address?

9. How might the current and likely future economic and labour market context in the UK affect the demand for, and impact of, A2 workers?Methodology and conceptual framework

10. What are the key theories of migration flows and effects? For example, key push and pull factors, or network effects. Can these theories help to predict the effects of lifting the restrictions?

Policy scenarios

11. What have been the impacts of the current A2 restrictions on the number and type of A2 (and other) immigrants coming to work in the UK, legally or illegally?

12. What have been the labour market and other economic impacts of restrictions on the employment of A2 and A8 nationals (or lack thereof) in other EU countries?

13. What is the likely impact of the lifting of restrictions on the number and type of A2 workers wanting to come to the UK?

14. What is the likely impact of lifting the restrictions on particular (low skilled or other) labour shortages (reducing or exacerbating them)?

15. What is the likely impact of lifting the restrictions on wider economic variables (eg. GDP per head, fiscal position etc)? What happened in the case of A8? Policy considerations and recommendation

16. How would a decision on A2 affect the working and effectiveness of the PBS (including the work of the MAC)?

17. What are the likely impacts on the A2 countries of the UK lifting, not lifting or partially lifting restrictions?

18. Should restrictions on A2 workers be lifted, not lifted, or partially lifted? If partially lifted, then how? If not covered above, what is the basis for this belief?

On wednesday the pound only got you €1.2282 - or to put it the other way round, a euro cost 81.4p

When the euro launched the pound bought €1.42, and it climbed to a peak of about €1.70.

Since the day that Gordon Brown arrived in number 10 (the guy is unlucky?) the value of Sterling has tanked. Observe:

The collapsing value of the pound will presumably increase the sterling cost of the UK's contribution to the EU.

The value of the UK's contributions and receipts both go up, and so does the net contribution.

In 2005 Tony Blair agreed that the UK would, over the 7 year financial perspective (2007-13), pay €103 billion into the EU, and receive back €46bn - a net contribution of €57bn.

At December 2005 exchange rates that would have meant paying in £70bn, getting back £31bn and making a net contribution of £39bn.

But at today's exchange rate, that it will mean paying in £84bn, getting back £37bn and making a net contribution of £47bn.

So the collapsing value of sterling could mean paying an extra £8 billion pounds into the EU.

Thats quite a lot of new hospitals, schools and roads.

In fairness, the first year of the programme shouldn't be affected as much. The pound only started to slide in spring 07, and as the Government recently pointed out in a letter to MPs:

"UK in-year contributions to the EC budget are not affected by exchange rate contributions. This is because VAT and GNI contributions , and any revisions to the VAT and GNI bases, are made on using a fixed exchange rate that is set on the last working day prior to the start of the EC budget year. However, the UK's net contribution over a given period will also depend on the level of UK receipts. Unlike UK VAT and GNI contributions, the exchange rate used for reciepts fluctuates in-year and is fixed two days before any payment is made to the UK. Exchange rate changes are one of the factors that affcect the forecast of future UK contributions, which are published twice a year in the budget and PBR.(Htp: Graham Brady)

We'll start to see the full effects in the official figures from next year. Should be one to watch out for.

WHAT price patriotism? In the case of Alitalia, Italy’s long-crippled flag-carrier, the answer is about €5 billion ($7.3 billion)—or some €125 for every one of Italy’s 40m taxpayers. Even before the operation mounted by Silvio Berlusconi’s government to preserve the airline’s Italianita, €3 billion of public money had gone into it. The rescue, known as Operation Phoenix, will funnel Alitalia’s €1.2 billion debts and its least profitable bits into a “bad company” that is dumped on the Italian treasury. A report by the Bruno Leoni Institute, a liberal think-tank, concludes that “altogether, the cost to the state could reach almost €2 billion.” But press estimates have ranged a lot higher, and many details remain undecided.

[...]

All this should be of keen interest to the European Commission. However, one of Mr Berlusconi’s first moves was to secure the transport portfolio there for a supporter, Antonio Tajani. Some of Alitalia’s rivals may yet complain to Brussels. But even before Mr Colaninno had arrived to explain Operation Phoenix, Mr Tajani had praised it for “favouring the [free] market and the principle of competition.”

Thursday, September 04, 2008

The Times carries the headline "Gordon Brown forced to abandon fuel aid plan after EU ruling over pollution permits"

It reports that:

Gordon Brown’s plan to help families struggling with rising fuel bills was in tatters last night after a scheme to make energy companies pay more for pollution permits was dismissed as unworkable, The Times has learnt.

The Prime Minister had hoped the scheme would raise about £500 million, which could be used to help to fund fuel vouchers for vulnerable families faced with big increases in gas and electricity bills this winter.

The initiative was expected to form the centrepiece of Mr Brown’s second big effort to restore his political fortunes after a lukewarm response to his housing measures this week.

But The Times understands that those plans have now been scrapped after senior government figures were told that Britain would not be allowed to increase the number of emissions permits it plans to sell under EU regulations.

No clearer example could you have of who is really in charge now. It was the centrepiece of the Prime Minister's relaunch - but now he isn't allowed to do it because of EU law.

Richard North speculates that energy might be "the issue" that relations between Britain and the EU come to a head over. That's quite possible - although we still expect that as the EU starts to take over health policy (starting with the Health Services Directive) there is scope for real fireworks.

These kind of top-level clashes are going to happen more and more often in the future as the EU becomes ever more intrusive.

"We do not need to know the exact identity of bloggers. We need some credentials, a quality mark, a certain disclosure of who is writing and why. We need this to be able to trust and rely on the source."

"The Economist is a valuable brand, its articles are trusted by readers without contributors having to reveal their names. If there is a way to validate the best bloggers the same way that publishing in the Economist validates its writers, it should be done."

"It is clear that a Harvard professor of international relations is likely to treat, for instance, the Middle East peace process or European integration in an educated and balanced manner. The same trust cannot be put in a radical high school student from Gaza or a Eurosceptic who has never been out of his village"

"The reader should know why this or that blogger should be trusted on a particular issue."

So eurosceptics are like radical Palestinians and have probably never left their villages.

Last week the Irish Times wrote up a Commission briefing note which suggested that the Irish only voted no because they had were tricked by the evil British media.

Well, you didn't expect they could make up their own minds, did you?

The briefing note blamed "A growth in readership and distribution of Eurosceptic British press" for the no vote. It said:

"Since 2002 we have seen an increase in UK with "Irishised" editorial of titles. 41% of all Irish people read one or more of the following; the Irish Sun, Irish News of the World, Sunday Times, People, Irish Mirror, Sunday Mirror, Daily Mail and Mail on Sunday. These have proven to be significant opinion formers which in general have been more Euro-hostile."

[...]

"While much has been made of the increase of UK tabloids and broadsheets, what has gone mainly unnoticed is the growth in reproduction of foreign news in indigenous Irish titles like the Irish Examiner, Irish Times and Irish Independent. The Irish Independent takes much of its European news from the Daily Telegraph. Despite being the largest national daily title, it no longer has a Brussels based journalist. The main reason for this is the cost cutting that many of the indigenous Irish titles underwent in the early part of the decade. Both the Irish Times and Independent reduced editorial staff numbers. This has created a dependency on outsourcing reporting to UK titles."The note says "Not only has the editorial been largely critical of Europe" (which isn't true) but also, "it is rumoured that it has been refusing contributions from staff that are pro-Europe" (a likely story).

So much for the Commission staying out of politics and merely providing neutral information. This is a one-sided briefing, designed to make people feel like they were tricked by the Brits.

We rang the Commission's DG communication to ask who had produced it. They said that it was "not an official document" but merely a "routine" note produced by the Commission's representation in Ireland which was meant for "internal" use. They were "surprised" to see it in the Irish Times. That said, they "didn't see anything controversial in it."

This "unofficial document" follows on from the previous misleading note on the commission's private "poll". That was a "leak" too. It seems like the Commission is "leaking" pretty badly. Basically the Commission punts out partisan briefings and then denies responsibility.

Nonetheless, leaving aside the none-too-subtle Brit-whacking, and the Commission's "unofficial" interventions in politics, the most intense criticism in the note is reserved for the evil internet. It warns that:

The internet has allowed increased communication between citizen groups away from Government and traditional media dominated sources.

Gasp!

Blogging is also seen as an anti-establishment activity. Few Yes campaigners came out with forceful counter arguments or were inspired to do so.

Zounds!

Because of the many different sources of No campaigners on the internet, classic rebuttals is made impossible.

Curse those evil uncontrollable bloggers! We need to hit back!

And so they have. Or rather, they're planning to.

The EU has had an issue with the internet for a while now (consistently documented by Richard North) .

Basically they don't like the internet because they can't control it.

So today the European Parliament’s Culture Committee has voted for a report (here is the draft) which proposes that the EU should regulate blogs.

It’s been a big deal in the Swedish blogosphere/media for some time. The final version of the report released today is somewhat watered down and written in vague language, but it appears as if a few potential regulations are proposed. It seems as if the idea is to make blogs subject to similar rules as the print and broadcast media. Proposals seem to include:

-> Making it impossible to blog anonymously, and making significant bloggers declare their interests.

-> Bloggers would be forced to give a right to reply to persons that are criticized in a blog post.

-> Introducing a code of conduct for the private-user-generated content and a system of royalties for such content (similar to the one used in broadcast media if I understand it correctly).

-> Bloggers should be pressed to voluntarily publish their “aims and background.”

The report complained that:

"The undetermined and unindicated status of authors and publishers of weblogs causes uncertainties regarding impartiality, reliability, source protection, applicability of ethical codes and the assignment of liability in the event of lawsuits. It recommends clarification of the legal status of different categories of weblog authors and publishers as well as disclosure of interests and voluntary labelling of weblogs."

The EP will vote on it end of September, according to the Swedish blogger HAX. Commissioners Reading and Wallstrom are said to be working on something similar.

Leaving aside whether it is even possible to do any of these things (hopefully not) the fact that MEPs are prepared to propose it in the first place is terrifying.

The report was initiated by Estonian Socialist MEP Marianne Mikko. As Swedish MEP Christopher Fjellner has pointed out, Marianne Mikkos view of journalism makes one think of George Orwell’s book 1984.

Which sort of makes sense, given that Mikko does have a degree in journalism from the Soviet Union - from 1984.

It looks like the EU summit today will do nowt but bluster. Perhaps they will agree to keep relations under review.

It's depressing. Russia has effectively called the EU’s bluff – it seems the EU will not react to the invasion of Georgia in any substantial way.

The EU members won’t intervene, won’t launch sanctions, and won’t set a timetable for Georgia to join the EU or NATO. In terms of post war aid, the EU is being outspent forty to one by the Russians (see post below).

There is no point in the EU trying to present itself as a superpower if it is going to behave like a useless jellyfish every time there is a real crisis.

Nonetheless, despite the EU's trouncing by Russia here, the Europhiles still have their heads in the clouds.

Liberation's blog suggests that the crisis is an opportunity to develop a common European identity: